Crony Capitalists Decide TPP Terms

by James Hoover / June 29th, 2015

Paul Samuelson, serving as advisor to Presidents Kennedy and LBJ, was the first American to win the Nobel Memorial Prize in Economic Sciences. He said the ultimate goal of economic science is to improve the living conditions of people in their everyday life. That goal should be an easy one to put into practice in a modern economy, but it is immediately beset with problems in the twenty-first century.

I’m sure, given a more nation-centric era, Samuelson envisioned the context of his goal to be national in scope. But currently, how would you separate the national versus the global, considering the extent of global commerce? Then how do you balance a nation’s sovereignty with the exigencies of global commerce. Nations consider their own citizens but the United Nations, a global organization, has only investigative and advisory powers.

But do nations really consider all of their citizens?

The North American Free Trade Agreement (NAFTA) was an unexpectedly bitter pill swallowed by American labor, and subsequently many America’s industries were rather swiftly supplanted by the machinations of cheaper foreign imports. It spurred “massive U.S. trade deficits and job loss, downward pressure on wages, unprecedented levels of inequality and new floods of agricultural imports.”

We have to say that American prices for many consumer products experienced precipitous dips due to cheaper foreign imports to perhaps ameliorate some of the negative effects, but NAFTA left too many Americans out of the negotiations as well, though we were better represented then.

Now it’s the Trans-Pacific Partnership (TPP).

Partly due to the globalization that NAFTA brought to the Western world, many current governments, especially in the US and England, increasingly determine that improved living conditions apply for only the upper class, not for the vast majority of citizens. In Samuelson’s day, Western societies were much more egalitarian.

The outcome wrought by the growing oligarchies in the world – supported by giant corporations and financial interests that seem untouchable – results in secret agreements negotiated by crony capitalists with no public discussion of vital trade policy.

Obama has many good points, but one of them does not involve shedding the plutocratic perspective that is burnished into Washington’s outer shell. Perhaps he even believes his own rhetoric about TPP benefitting all. We might call it an extreme prejudice for “trickle-down” economics that barely trickles. Conservative economists champion it as “supply-side” economics, though definitively proven not to work. In effect, it amounts to mega-corporations putting their own profits ahead of workers and consumers.

Remember that Washington is encircled by the agents of moneyed interests whose 24/7 buzz drowns out the rest of us. With Citizens United, money flows out of the woodwork for compromised politicians of any stripe, even GOP nut jobs running for president. Supposed bastions of independence, Supreme Court justices cozy up with billionaires like the Koch brothers, imbibing their toxic plans for the rest of us. Best known for his association with the Koch brothers is Justice Clarence Thomas.

Once, the most effective policy was used in Washington for decision-making. Now it’s politics and crony capitalism.

The old adage, “Those who forget the past are bound to repeat it,” perhaps still applies. A blessing or perhaps a curse of non-ignorance, I’m old enough to remember President Kennedy’s appointment of independent economic advisors like Paul Samuelson, schooled academics, not Wall Streeters, who advised based on goals, indubitably applying to all Americans, who then had cause to believe in opportunity for their offspring’s futures.

Our democracy was more firmly in the hands of the majority then. Unity around the Cold War was high, unions were strong, and corporations were still constrained in size and strength, not monoliths which oppress consumers and workers.

All that has changed.

By 2014, we foolishly gave Republicans a majority in both houses of Congress, a move assuring pro-corporate giveaways like TPP. Of course, even Democrats drank the plutocratic Kool Aid, but the GOP majority was strong enough to vote in the Fastrack TPP.

We are not saying that free trade is not a good idea. If done with the interests of all in mind, it can be quite beneficial. But consider what most Republicans and a few Democrats did. They took away the power of our representatives (themselves) to bargain over the rules governing a trade agreement with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, Vietnam, and potentially South Korea (as of 2014). Just these twelve partners govern 40 percent of U.S. imports and exports.

In a Bill Moyers article, economist, Dean Baker stated, “This (still secret) pact [TPP] has little to do with free trade. It can more accurately be described as a pact designed to increase the wealth and power of crony capitalists.” In a more egalitarian era, Samuelson’s goal is to improve the living conditions of people in their everyday life. For Samuelson, ”People” didn’t mean “crony capitalists” alone.

As you may have gathered, billionaires like the Koch brothers put their political money on reduced taxes for the rich and regulatory structures that favor their profit status. That is why domestically their money is always on gutting the EPA.

What better idea is there for the rich than to coordinate world-wide their efforts to control the regulatory effort? For example, it is not enough for drug companies to gouge the American consumer (The Bush Congress forbade Medicare to bargain for lower drug prices); they must also work full force to negotiate global drug controls that increase the strength of patent and related protections, this so that drugs don’t go generic or if they do, take longer to do so. Another goal is to increase foreign drug prices so that they don’t undercut the unnaturally high prices in the US.

Additionally China is not mentioned in TPP but would figure mightily in providing parts to countries like Viet Nam which could get up to 65 percent of its finished product parts in China. With only 35% from Viet Nam, they can assemble it in Hanoi and call it a domestic Vietnamese product.

Speaking of China, it is famous for the practice of controlling its currency’s value rather than allowing a free flow. Our annual trade deficit with China is almost $300 billion. That means they can control the value of the Yuan relative to the American dollar. Due to this practice, the US is running an overall annual trade deficit of more than $500 billion because the dollar is priced too high relative to currencies of trading partners, including China. The TPP does nothing about currency values.

The Americans for Limited Government (ALG) revealed that the secret TPP agreement would surrender American sovereignty to international tribunals. These Pacific nations will enter a free trade agreement only if they are exempt from our onerous environmental and financial regulations. For example, inspection of food products will most likely be done by importing countries with their standards, not those of the US. Imported food could be in jeopardy.

TPP provides legal rights to corporations and investors that it does not extend to unions, public interest groups and individuals. For example, it allows companies to use secretive international tribunals to sue sovereign governments for damages when those governments cut into corporate profits by passing public-interest policies or extend policies that take or restrict the corporation’s property. TPP is not expected to extend these rights to labor, environmental and human rights laws and Congress has in the past quashed such citizen rights.

It is quite evident to all of us that the standards that govern us are dominated by crony capitalists. To give such corporate interests authority over our lives through secret trade agreements is like giving foxes authority over the barnyard. In essence, as a member of this metaphoric barnyard, when you ask, “What’s for dinner,” you really don’t need the answer.

James Hoover is a recently retired systems engineer. He has advanced degrees in Economics and English. Prior to his aerospace career, he taught high school, and he has also taught college courses. He recently published a science fiction novel called Extraordinary Visitors and writes political columns on several websites. Read other articles by James.